In short: "We also favor the offshore drilling sector… they're in a massive bottoming process here," with "very very favorable green shoots developing, consolidation in the industry" and balance sheets wiped clean by COVID bankruptcies — "very very attractive risk-adjusted returns." The price of admission is volatility: the offshore names "will either be our biggest contributors or biggest detractors to performance in any given month or quarter."
Offshore drillers own the rigs that drill wells at sea and rent them to oil companies by the day. They don't own the oil, so they are a bet on activity: when producers need new fields, day-rates and utilisation rise together and profits move violently. They are the classic late-cycle way to own an oil shortage, because a shortage eventually forces companies back into expensive deep water.
The reason he likes them now is a cleaned-up industry rather than a hot market. "Most of the companies went bankrupt during COVID and so they all wiped their balance sheets clean" — the debt that killed them last cycle is gone — and the survivors are consolidating. He describes them as "in a massive bottoming process," with early positive data and "very very attractive risk-adjusted returns."
He is unusually candid about the cost of holding them: "our offshore names will either be our biggest contributors or biggest detractors to performance in any given month or quarter," and "in drawdowns they definitely pull back hard." A position you have to be able to sit through.
34:54Not that it can't be done, but that's maybe not enough to build a whole portfolio around the way it was a few years ago. And then we also favor the offshore drilling sector. Those names can be very volatile. They're in a massive bottoming process here. We're starting to see more and more positive data come out in the offshore space.
Nothing matches this filter.
Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.